Saturday, May 14 2016 12:09
Svetlana Hovsepyan

When transactions on interbank forex market decline, Armenian dram starts depreciating

When transactions on interbank forex market decline, Armenian dram  starts depreciating

ArmInfo.When transactions on interbank forex market decline, Armenian dram starts depreciating. This week, the amount of operations on the interbank forex market dropped from $10.450 mln to $3.8 mln. This raised the AMD/USD exchange rate from 479 to 480.5 AMD/$1 by Thursday and then reduced it to 479.5 AMD/$1 on Friday. On Friday, the transactions on the NASDAQ OMX Armenia totaled $700 thsd. Together with the 1.1 mln USD transactions on interbank forex market, this amount had a revaluation effect on AMD. It is noteworthy that the Central Bank of Armenia keeps abstaining from interventions.

As a result, in Q1 2016, AMD devaluated against USD to 496 AMD/$1 (February 12) and then stood at initial 482 AMD/$1 on March 25.  By April 2, AMD appreciated against USD to 480.5 AMD/$1, and then started depreciating again to 484.5 AMD/$1 by April 8. By April 15 AMD revaluated to 481 AMD/$1 with following strengthening to 479 AMD/$1 by April 29. This level was retained through May 11, but on May 12 it rose to 480.5 AMD/$1. On May 13, it dropped to 479.5 AMD/$1. Independent experts say the AMD/USD exchange rate may rise to 540-550 AMD/$1 by late 2016, amid the financial and economic crisis in Russia and the sliding prices of oil and crude metals, which is one of the key export items of Armenia.

 
The CBA press office has told ArmInfo that this week NASDAQ OMX Armenia was active on Friday only - 700 thsd USD at the average exchange rate of 479.64 AMD/$1. At the same time the interbank forex market continues actively operating - on May 10-13 it secured $3.8 
mln (down 64% versus the previous week) at the average exchange rate of 479.53 AMD/$1 (versus the previous 479.04). The maximum amount of the transactions was registered on Tuesday (May 10) - $3.2 mln at the average exchange rate of 478.95 AMD/$1. 
 
The source says that on May 10-13, on the intra-bank currency market (transactions with customers) the banks bought $58 mln (1.4% drop versus the previous week) at the average exchange rate of 478.39 AMD/$1, and sold $60.6 mln (13.2% drop versus the previous week) at the average exchange rate of 479.96 AMD/$1. In the meantime, the banks bought 4.6 mln EUR (down 40.3%) at the average exchange rate of 542.47 AMD/1EUR, and sold 7.5 mln EUR (down 17.6%) at the exchange rate of 547.90 AMD/1EUR. The banks also bought 846.02 mln RUR (up 16.3%) at the average exchange rate of 7.27 AMD/1RUR and sold 336.6 
mln RUR (up 10.3%) at the exchange rate of 7.36 AMD/1RUR. 
 
During the previous week (May 2-7), the Armenian banks provided AMD loans worth 44.6 bln and USD loans worth $30.4 mln. As compared with the previous week (April 25-30), AMD loans grew by 17.7%, and the ones in terms of USD dropped by 35%. 
 
To recall, in 2015, on the retail foreign exchange market of Armenia AMD weakened against USD from 477 to 482 AMD/$1 on average and strengthened against EUR from 571.5 to 529 AMD/1EUR and against Russian ruble from 8.2 to 6.9 AMD/1 RUR.  Between December 14 and 28, the Central Bank made almost daily interventions.  AMD depreciated amid decline of foreign trade turnover (by 20.6%), while import dropped more significantly (by 26.5%) than export (by 3.9%) as well as the decline in transfer inflow to Armenia more than by 30%, and 
this happened in conditions of low buying capacity of the population and low economic activity in the country.  Since early 2016, AMD started depreciating again on the retail foreign exchange market of Armenia however since March it strengthened and stood at 482 AMD/1USD by March 25.  At the same time AMD depreciated against EUR to 538 
AMD/1EUR and against RUR to 7.1AMD/1RUR. Later, on April 2 AMD appreciated against USD to 480.5 AMD/$1, at the same time depreciating against EUR to 547 AMD/1 EUR, and against RUR to 7.2 AMD/1RUR. Afterwards, the AMD depreciated against USD to 484.5 AMD/$1 by April 8, at the same time depreciating against EUR to 551 AMD/1EUR and against RUR to 7.3 AMD/1RUR. The following five weeks (April 11- May 13) were a period of revaluation for the Armenian dram. It appreciated against USD to 479.5 AMD/$1, against EUR to 545 AMD/1EUR amid depreciation against Russian ruble to 7,5 AMD/1RUR.
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